ASFT 10-Q
Appsoft Technologies, Inc. (ASFT)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
| For the quarterly period ended: |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
| For the transition period from ________ to _________ |
Commission file number:
(Name of Small Business Issuer in its charter) |
| ||
(State or other jurisdiction of Identification No.) |
| (I.R.S. Employer incorporation or organization) |
Address of registrant's principal executive offices
(
Issuer’s telephone number
(Former name, former address and former
fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| OTCQB |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | Smaller reporting company | ||
|
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
At July 29, 2022, there were
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AppSoft Technologies, Inc.
Balance Sheets
|
| As of |
|
| As of |
| ||
|
| June 30, 2022 (Unaudited) |
|
| December 31, 2021 (Audited) |
| ||
CURRENT ASSETS |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
TOTAL CURRENT ASSETS |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts Payable and Accruals |
|
|
|
|
|
| ||
Accrued Interest |
|
|
|
|
|
| ||
TOTAL CURRENT LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Note Payable |
|
|
|
|
|
| ||
TOTAL LIABILITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
STOCKHOLDER'S EQUITY |
|
|
|
|
|
|
|
|
Series A Cumulative, Convertible Preferred stock ($ |
| $ |
|
| $ |
| ||
Common stock ($ |
|
|
|
|
|
| ||
Additional Paid in Capital |
|
|
|
|
|
| ||
Additional Paid in Capital - Stock Warrants |
|
|
|
|
|
| ||
Accumulated Deficit |
|
| ( | ) |
|
| ( | ) |
TOTAL STOCKHOLDER'S EQUITY (DEFICIT) |
|
| ( | ) |
|
| ( | ) |
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY/(DEFICIT) |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| 2 |
AppSoft Technologies, Inc.
Statements of Operations
|
| For the three months ended June 30, |
|
| For the six months ended June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Sales |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Total Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Amortization/Depreciation Expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest Expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Outside Services |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Professional Fees |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total Expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Loss from operations |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Provision for Income Taxes |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
NET LOSS |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Weighted average common shares outstanding, basic and fully diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully diluted net loss per common share: |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
The accompanying notes are an integral part of these financial statements.
| 3 |
AppSoft Technologies, Inc.
Statements of Cash Flows
|
| For six months ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Amortization and Depreciation |
|
|
|
|
|
| ||
Adjustments to reconcile net (loss) |
|
|
|
|
|
|
|
|
to net cash provided by (used in) operations: |
|
|
|
|
|
|
|
|
Changes in Assets and Liabilities: |
|
|
|
|
|
|
|
|
Increase (decrease) in Accounts Payable and Other Accruals |
|
|
|
|
|
| ||
Increase (decrease) in Accrued Interest Expense |
|
|
|
|
|
| ||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
|
| ( | ) |
|
| ( | ) |
CASH FLOWS TO/(FROM) FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Note Payable - borrowings |
|
|
|
|
|
| ||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, |
|
|
|
|
|
|
|
|
BEGINNING OF THE PERIOD |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
END OF THE PERIOD |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
CASH PAID DURING THE PERIOD FOR: |
|
|
|
|
|
|
|
|
Interest |
| $ |
|
| $ |
| ||
Taxes |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| 4 |
AppSoft Technologies, Inc.
Statement of Stockholders' Equity
For the six months ended | ||||||||||||||||||||||||||||||||
June 30, 2022 | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
| Additional |
|
|
|
|
|
|
| ||||||||
|
| Common Stock |
|
| Preferred Stock |
|
| Paid-in |
|
| Paid-in Capital |
|
| Accumulated |
|
| Total |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock Warrants |
|
| Deficit |
|
| Equity |
| ||||||||
Balances, January 1, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
| $ | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, June 30, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
For the six months ended | ||||||||||||||||||||||||||||||||
March 31, 2021 | ||||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
| Additional |
|
|
|
|
|
|
| ||||||||
|
| Common Stock |
|
| Preferred Stock |
|
| Paid-in |
|
| Paid-in Capital |
|
| Accumulated |
|
| Total |
| ||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Capital |
|
| Stock Warrants |
|
| Deficit |
|
| Equity |
| ||||||||
Balances, January 1, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares converted to Common Shares |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
| $ | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, June 30, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||
The accompanying notes are an integral part of these financial statements.
| 5 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE A—BUSINESS ACTIVITY
AppSoft Technologies (the "Company”) was organized under the laws of the State of Nevada March 24, 2015. The Company’s fiscal year end is December 31st. AppSoft is a developer of innovative games/mobile apps as well as Esports/E-gaming platforms, including Esportsreporter, a leading news channel for all things esports and professional gaming. Coverage includes events with live reporters as well as conducting face to face and virtual interviews with professional players in the space. We are currently building a following on digital media to generate revenue from sales, sponsorships, or merchandise from our fanbase and advertisers published on our ad supported content.
NOTE B—GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has a deficit accumulated of $
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the date when these financial statements were issued. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty.
To address these aforementioned, management has undertaken the following initiatives: 1) enter into discussions to secure additional equity funding from current or new shareholders; 2) undertake a program to continue to monitor the Company’s ongoing working capital requirements and minimum expenditure commitments; 3) continue their focus on maintaining an appropriate level of corporate overhead in line with the Company’s available cash resources.
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation- The financial statements included herein were prepared under Generally Accepted Accounting Principles (GAAP).
All adjustments have been made which in the opinion of management are necessary, normal, and recurring in nature for presentation.
Interim filings should be read in conjunction with the Company’s annual report as of December 31, 2021.
Cash and Cash Equivalents- For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.
Management’s Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The financial statements above reflect all of the costs of doing business.
Revenue Recognition- On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, Topic 606 (“ASC 606”), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new revenue standard replaces most existing revenue recognition guidance in GAAP and permits the use of either the full retrospective or modified retrospective transition method. The Company adopted this standard using the modified basis effective January 1, 2019, and given the Company's limited revenue, the modified retrospective basis has no material impact on prior years given the limited revenue.
| 6 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D
Comprehensive Income (Loss) - The Company reports Comprehensive income and its components following guidance set forth by section 220-10 of the FASB Accounting Standards Codification which establishes standards for the reporting and display of comprehensive income and its components in the financial statements. There were no items of comprehensive income (loss) applicable to the Company during the period covered in the financial statements.
Net Income per Common Share- Net loss per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There was a total of
Deferred Taxes- The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
Fair Value of Financial Instruments- The carrying amounts reported in the balance sheet for cash, accounts receivable and payable approximate fair value based on the short-term maturity of these instruments.
Accounts Receivable- Accounts deemed uncollectible are written off in the year they become uncollectible. As of June 30, 2022 and 2021, the balance in Accounts Receivable was $
Impairment of Long-Lived Assets- The Company evaluates the recoverability of its fixed assets and other assets in accordance with section 360-10-15 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. The Company adopted the statement on inception. No impairments of these types of assets were recognized during the periods ended June 30, 2022 and 2021.
Stock-Based Compensation- The Company accounts for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Fair Value for Financial Assets and Financial Liabilities- The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy
| 7 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE C—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONT’D
defined by Paragraph 820-10-35-37 are described below:
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
Level 2 | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3 | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s note payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at the periods ended June 30, 2022 and 2021.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at June 30, 2022, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the periods ended June 30, 2022 and 2021.
Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the Company’s financial position, results of operations or cash flows.
NOTE D-SEGMENT REPORTING
The Company follows the guidance set forth by section 280-10 of the FASB Accounting Standards Codification for reporting and disclosure on operating segments of the Company. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of June 30, 2022 and 2021
| 8 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE E-CAPITAL STOCK
The Company is authorized to issue
Total issued and outstanding shares of common stock is
Total issued and outstanding shares of preferred stock is
The Company is authorized to issue
The Company agreed to reduce the price at which each share of Series A Preferred Stock, of which Ventureo is the sole holder, converts into Common Stock from $0.005 per share to $
During 2021, the Company converted
Capital Contributions
Brian Kupchik, President and CEO made no capital contributions during the six months ended June 30, 2022 and 2021.
| 9 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE F – INCOME TAX
The Company provides for income taxes under (now included under Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. For Federal income tax purposes,
No tax benefit has been reported in the financial statements because after evaluating our own potential tax uncertainties,
The Company is not obligated to pay State Income Taxes because it is a Nevada corporation. The Company does not currently have any tax returns open for examination.
NOTE G--NOTES PAYABLE AND NOTE EXCHANGE AGREEMENT
On November 30, 2018, the Company entered into an Exchange Agreement with its Creditors under which each Creditor agreed to cancel the Original Notes issued and accept a new promissory note in the amount of $
In consideration for the exchange of the Original Notes for the New Notes, the Company agreed to reduce the price at which each share of Series A Preferred Stock, of which Ventureo is the sole holder, converts into Common Stock from $
Although new borrowings are not yet formalized into a note agreement, the Company and the lender agree that the new loans have the same terms and conditions for the formalized notes.
The total amount of the Notes Payable is $
Detail of the Notes Payable is as follows:
| · | 2018 Principal and Interest consolidated into new promissory note in the amount of $ |
| · | During the 1st Quarter 2019, the Company incurred an additional $ |
| · | During the 2nd Quarter 2019, the Company incurred an additional $ |
| · | During the 3rd Quarter 2019, the Company incurred an additional $ |
| · | During the 4th Quarter 2019, the Company incurred an additional $ |
| 10 |
APPSOFT TECHNOLOGIES
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
AS OF JUNE 30, 2022
NOTE G--NOTES PAYABLE AND NOTE EXCHANGE AGREEMENT—CONT’D
As of June 30, 2020, the Company executed a Drawdown Promissory Note in favor of Bryan Glass Securities, Inc. (“BSG”) under which the Company is entitled to borrow up to an aggregate of $
During the year 2020, $
During the year 2021, $
During the 1st quarter 2022, $
During the 2nd quarter 2022, $
As of June 30, 2022, the Company has borrowed an aggregate of $
NOTE H—FIXED ASSETS
In July 2016, the Company purchased computer equipment for $
NOTE I—MATERIAL EVENTS/SUBSEQUENT EVENTS
Since the close of the period covered by the financial statements of which these notes form a part, the following material transactions have occurred:
On April 2, 2021, an amendment to the original Drawdown Promissory note was issued. Under the original Drawdown Note, the Company was extended up to $
Subsequent Events
The Company evaluated for subsequent events through the issuance date of the Company’s financial statements and has determined no subsequent events have occurred.
| 11 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q, or Report.
The information in this discussion and elsewhere in this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “may,” “will,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “could,” “estimate,” “continue” and similar expressions or variations identify forward-looking statements.
Although we believe that we have a reasonable basis for each forward-looking statement contained in this Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Report. Factors that might cause such a discrepancy include, but are not limited to:
| · | Our ability to obtain financing as and when needed on acceptable terms. |
| · | Our failure to develop or acquire and publish new Apps that achieve market acceptance or we do not continue to enhance our existing Apps. |
| · | Our inability to maintain a good relationship with the markets where our Apps are distributed. |
| · | Our ability to develop our eSports business and generate revenue from sales, sponsorships, merchandise and advertiser supporter content; |
| · | Our inability to keep pace with technological changes and market conditions in the Apps industry. |
| · | Our inability to compete against a wide range of companies that market Apps, many of which have significantly greater resources than we do. |
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the Securities and Exchange Commission, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview
We develop, publish and market Apps for smartphones and tablet devices. We derive revenue from sales, or downloads, of our Apps and from advertisements published on our ad-supported game titles. During 2021, we did not generate any revenue. Over the course of 2022, we expect to generate revenue from the sale of software titles that we are developing for own account, from titles that were developed by third-parties which we acquired and from sales, sponsorships, and merchandise from our fanbase and advertisers published on ad supported content on our Esports platform. Operating margins are dependent in part upon our ability to release new, commercially successful software products and to manage effectively their development costs.
Our Apps titles include games designed to appeal to a broad cross section of consumers. We offer all of our game titles in both a free advertisement-supported version and a paid version that does not display ads. We believe that the ad supported versions allow for wider dissemination of our titles to consumers who might not otherwise spend money for an App without first playing the game.
| 12 |
We market, sell and distribute our games through as Apple’s App Store, a direct-to-consumer digital storefront. We currently expect to advertise our Apps through the digital storefronts, our own website, social media, such as Facebook and LinkedIn, through mobile ad networks and search engine optimization, or SEO, tools.
During the second quarter of 2021, we launched an Esports/E-gaming platform which we refer to as Esportsreporter.com. Esportsreporter.com is a news channel for a broad spectrum of esports and gaming. The site publishes the most relevant breaking news for esports and gaming, including coverage of industry trends and guides on the business of esports and gaming for investors and aspiring esports and gaming professionals. The site covers the most important news in esports on a daily basis while also diving deeper with coverage of events with live reporters as well as conducting face to face and virtual interviews with professional players.
We recently launched Gamerfy.com, a site through which we hope to gain access to new game titles developed by third parties to expand our existing product offerings. We evaluate prospects based on a variety of factors. If we conclude that a particular prospect is worth pursuing, we may fund the development of the App through launch and beyond.
We have been constrained in our development and acquisition activities by a lack of cash. Our ability to pursue and achieve our objectives is predicated on our receipt of meaningful revenue from sales of our existing Apps and those we may release in the future and from our ability to raise capital from outside sources.
Growth Strategies and Outlook
Our principal growth strategy entails developing and acquiring new Apps to supplement our existing Apps portfolio and promoting our Esports platform.
Our primary focus will be to release new game titles. We seek to solicit new games and concepts that we may acquire from third parties. We also will seek to develop and publish free-to-play games. Free-to-play games are games that a player can download and play for free, but which allow players to access a variety of additional content and features for a fee, through “in-app purchases” utilizing virtual currency that may be purchased through digital storefronts, and to engage with various advertisements and offers that generate revenues for us. We may seek to acquire franchises around which we develop games, including movies, television programs, toys and other cultural phenomena that lend themselves to gamification.
During the first quarter of 2022, we launched a video game incubator, Gamerfy.com, which will seek to acquire and commercialize the next generation of game titles with particular focus on community play, the Metaverse and NFT’s, each of which would allow us to sell into rapidly growing market segments. We expect Gamerfy to be the principal source of new games for us for the foreseeable future.
Our revenues will depend significantly on growth in the mobile games market and our ability to develop or acquire and publish Apps that are well-received by consumers. In addition, because our products are purchased with disposable income, our success is dependent on the overall strength of the economy in the United States. We expect to invest resources in research and development, analytics and marketing to introduce new Apps and continue to update our existing Apps, and to the extent that Apps into which we have invested significant capital are not successful, our business and financial condition could be harmed. We operate in an environment that is extremely competitive for users against a continually increasing number of developers, many of which are significantly larger than us and have other competitive advantages. We expect to allocate a material portion of our operating revenue and capital that we receive to sales and marketing initiatives in connection with the launch and promotion of our games in an effort to drive sales.
We are currently seeking to build a following on digital media for our Esports/E-gaming platform and will seek to monetize the site and our audience utilizing an array of proven techniques, including generating revenue from sales, sponsorships, merchandise, and advertiser supported content.
Our ability to achieve and sustain profitability will depend not only on our ability to generate meaningful our revenues, but also on our ability to manage our operating expenses. Currently, we have one full-time employee, who receives compensation when and as determined by the board of directors. For the foreseeable further, we expect to utilize the services of independent contractors and consultants, who we believe are readily available for our purposes, in order to manage our personnel costs. We also will continue to maintain a virtual office as long as our operations permit us to do so to contain our office space overhead.
| 13 |
We require significant additional capital to fund the development of Apps in process that we have developed internally or acquired from third parties during the last year. We also require capital to fund marketing initiatives for our existing products and the launch and marketing of Apps in development. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.
Results of Operations for the Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021 (unaudited)
The following table presents our results of operations for the three months ended June 30, 2022 and 2021:
|
| Three Months Ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Revenue |
| $ |
|
| $ | - |
| |
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Selling, General and Administrative |
|
| 3,714 |
|
|
| 3,311 |
|
Amortization/Depreciation Expense |
|
| - |
|
|
| 104 |
|
Interest Expense |
|
| 1,575 |
|
|
| 232 |
|
Outside Services |
|
| 174 |
|
|
| 6,923 |
|
Professional Fees |
|
| 3,840 |
|
|
| 585 |
|
Total Expenses |
|
| 9,303 |
|
|
| 11,155 |
|
Net loss from operations |
| $ | 9,303 | ) |
| $ | (11,155 | ) |
Results of Operations for the Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021.
The following table presents our results of operations for the six months ended June 30, 2022 and 2021:
|
| Six Months Ended June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Revenue |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
Selling, General and Administrative |
|
| 7,886 |
|
|
| 7,074 |
|
Amortization/Depreciation Expense |
|
| - |
|
|
| 207 |
|
Interest Expense |
|
| 3,107 |
|
|
| 2,530 |
|
Outside Services |
|
| 1,629 |
|
|
| 13,149 |
|
Professional Fees |
|
| 4,690 |
|
|
| 835 |
|
Total Expenses |
|
| 17,312 |
|
|
| 23,795 |
|
Net loss from operations |
| $ | (17,312 | ) |
| $ | (23,795 | ) |
| 14 |
Liquidity and Capital Resources
Liquidity is the ability of a company to generate adequate amounts of cash to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, the availability of credit facilities, levels of accounts receivable and accounts payable and capital expenditures.
As of June 30, 2022, we had working capital deficit of $37,974, compared to working capital deficit of $34,616 at December 31, 2021.
Since our inception, we have financed our operations through the sale of equity securities, from third party loans and from revenue generated from operations.
Over the last several years, we have been borrowing cash from Empire State Financial Inc., Bryan Glass Securities, Inc. and their related parties to fund our operations. During the six months ended June 30, 2022, we borrowed an aggregate of $13,890 from these entities. As of June 30, 2022, we had borrowed an aggregate of $317,831 principal amount from these parties and there remains $34,589 available for borrowing under the drawdown note. The loans from these entities are evidenced by promissory notes that mature on December 31, 2022 and bear interest at the rate of 2% per year.
Our primary requirements for liquidity and capital are to fund the development of Esports platform, and the development and acquisition of new Apps and for sales and marketing initiatives in connection with the launch and promotion of our games, as well as for working capital to fund our general corporate needs, including filing reports under the federal securities laws. We work with independent game designers, developers and programmers who provide us with new ideas and titles to publish. We also are soliciting new games and concepts that we may acquire from third parties.
Since our customers pay for their purchases by credit or debit card at the time of sale, neither inventories nor receivables are relevant to our business.
Our cash on hand and cash flow from operations are not sufficient to fund our existing operations or support our desired development and acquisition strategy or required in connection with launching, marketing and promoting our games. Over the last twelve months, we have been using the proceeds from loans to fund our operations. We are seeking to identify meaningful sources of capital to fund the entire range of our operations and development activities, though we cannot provide any assurance that we will identify any such sources of capital. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities or through other financing mechanisms. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital will continue to constrain our operations, including App development and marketing, and restrict our ability to grow. If we are unable to obtain additional financing, we may possibly have to cease our operations.
Cash Flows:
The following table presents summary cash flow information:
|
| For the six months ended June 30, 2022 |
|
| For the six months ended June 30, 2021 |
| ||
|
|
|
|
|
|
| ||
Net cash used in operating activities |
| $ | (14,205 | ) |
| $ | (21,057 | ) |
Net cash used in investing activities |
|
| — |
|
|
| — |
|
Net cash provided by financing activities |
|
| 13,890 |
|
|
| 21,057 |
|
Net increase (decrease) in cash |
| $ | (315 | ) |
| $ | 676 |
|
| 15 |
Contractual Commitments as of June 30, 2022
As of June 30, 2022, the Company had no contractual obligations (as such term is defined in Item 303 of Regulation S-K promulgated under the Securities Act), other than the loans from Empire State Financial Inc., Bryan Glass Securities, Inc. and their related parties as described above under the heading “—Liquidity and Capital Resources.”
Going Concern
The notes to our financial statements for the quarter ended June 30, 2022 and the report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2021 include an explanatory paragraph with respect to our ability to continue as a going concern. As reflected in the accompanying financial statements, the Company has a deficit accumulated of $890,305 at June 30, 2022. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The accompanying financial statements do not include any adjustments that might arise because of this uncertainty
The presence of the going concern explanatory paragraph suggests that we may not have sufficient liquidity, or minimum cash levels, to operate our business. Since our inception, we have incurred losses and anticipate that we will continue to incur losses until such time as our Apps generate sufficient revenue to offset our research and development, general and administrative and sales and marketing expenses. We will need to raise additional capital to fund our near-term operational plans described elsewhere in this report. We cannot assure you that we will be successful in our operational plans. We cannot be sure that the additional capital we require will be available on acceptable terms or at all. If adequate funds are not available on acceptable terms or at all, we may be unable to develop or enhance our services and products, take advantage of future opportunities, repay debt obligations as they become due, or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition, and results of operations.
Off-Balance Sheet and Other Arrangements
We do not engage in any activities involving variable interest entities or off-balance sheet arrangements.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we might not be able to fully offset these higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.
Critical Accounting Policies and Use of Estimates
The discussion and analysis of financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these condensed consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, our management evaluates its estimates based upon historical experience and various other assumptions that it believes to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The Company believes that its significant accounting policies affect its more significant estimates and judgments used in the preparation of its consolidated financial statements. Our significant accounting policies are described in Note C to our audited financial statements included in our annual report on Form 10-K for the period ended December 31, 2021. We do not believe that there has been any significant change in the Company’s critical accounting policies since December 31, 2021.
| 16 |
Recent Accounting Pronouncements
Emerging Growth Company Critical Accounting Policy Disclosure: We qualify as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
See Note C to the financial statements furnished with this report for a discussion of recent accounting pronouncements that had a material effect on the financial statements presented herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the Exchange Act, the Company carried out an evaluation with the participation of the Company's management performed an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer, who is the Company’s principal executive officer and principal financial officer and who we refer to herein as our PEO, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the quarter ended June 30, 2022. Based upon that evaluation, the Company’s PEO concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2022 due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.
Management is in the process of determining how best to address this condition and implement a more effective system to ensure that information required to be disclosed in this quarterly report on Form 10-Q has been recorded, processed, summarized and reported accurately. Our management acknowledges the existence of this problem, and intends to developed procedures to address them to the extent possible given limitations in financial and manpower resources. While management is working on a plan, no assurance can be made at this point that the implementation of such controls and procedures will be completed in a timely manner or that they will be adequate once implemented.
Changes in Internal Controls
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
| 17 |
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are presently no pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4- MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS.
Exhibit |
| Description |
|
|
|
| ||
|
|
|
| ||
|
|
|
|
101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
|
|
|
101.SCH |
| Inline XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | In accordance with Item 601 of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933. |
| 18 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| APPSOFT TECHNOLOGIES, INC. |
| |
|
|
|
|
Date: July 29, 2022 | By: | /s/ Brian Kupchik |
|
| Name: | Brian Kupchik |
|
| Title: | President, Principal Executive Officer and Principal Financial Officer |
|
| 19 |